Oracle officials last week said the firm plans to deliver a major update to its collaboration software by year-end, adding instant messaging, improving integration with enterprise applications and enhancing other features.

The third release of Collaboration Suite is intended to make the product a stronger rival to Microsoft's Exchange and IBM's Lotus Domino, which dominate the corporate e-mail server market.

The upgrade has been slow in coming. Oracle originally expected to have it out by mid-year and industry watchers had expected IM functionality to be included in the second release, which was issued last June. Microsoft and IBM already sell IM products.

But Oracle remains committed to Collaboration Suite, company officials say. Oracle just hired Terry Olkin, co-founder and former CTO of secure messaging vendor Secure Data in Motion, also known as Sigaba. As Oracle's chief architect for collaboration Suite, Olkin will set the future direction for the product.

"The challenge is bringing different pieces of Collaboration Suite into an integrated and easier-to-use product," Olkin says.

Another task is raising the product's profile. "Clearly, it is not well known. It's not in the same breath as Exchange or Notes," he says.

Oracle pitches Collaboration Suite as a less expensive and more secure alternative for corporate e-mail in that it works with many user interfaces and offers certain benefits because it is integrated with a common database. These benefits include complying with regulations that require retention of all kinds of electronic communications, Oracle says.

To move Collaboration Suite from playing catch-up with Exchange and Domino to a leading position, Oracle needs to come out with an innovative messaging system, Oracle officials say. Aside from IM, Oracle will deliver enhanced features to rival Microsoft's Windows SharePoint Services group collaboration Web sites and improved integration with Oracle's enterprise application products, says Rob Koplowitz, a senior director of product marketing at Oracle.

The company said last year that it sold Collaboration Suite to 500 customers in the 12-month period until May 31, 2003. In the six months after that, Oracle added another 250 customers, it said in a financial overview.

Evers is a correspondent with the IDG News Service's San Francisco bureau.